Trade War Could Impede US Transport Infrastructure Growth

An escalating trade war between the United States and some of its
major trading partners would impair growth for U.S. airports,
toll roads and ports over time if it slows the economy or
triggers a recession, Fitch Ratings said on Wednesday.

Major credit rating agencies have increasingly been concerned
that U.S. tariffs and retaliatory measures could harm state and
local economies dependent on international trade.

The administration of President Donald Trump has imposed tariffs
on steel and aluminum imports from Canada, Mexico and Europe, and
on billions of dollars of Chinese goods, bringing swift
retaliatory tariffs on U.S. goods.

In its latest report, Fitch cited potential auto tariffs as a
concern for the bond-financed U.S. transportation sector, where
stable operations are expected for the remainder of 2018.

"Were auto tariffs to significantly raise the cost of purchasing
an automobile, they could act as a sort of tax on motorists that
would increase the costs of auto transportation and in turn
reduce demand," Scott Monroe, a Fitch analyst, said in a
statement.

Meanwhile, the trade situation has not yet hurt U.S. ports,
although facilities with higher dependence on Asian trade may
feel the impact when tariffs hit, according to Fitch.

"Investors are showing increasing interest in terminal assets as
they seek steady cash flows in infrastructure assets," said Emma
Griffith, a Fitch analyst.

As for airports, air cargo is a small part of their operations,
but a trade war could worry facilities that handle large
international shipments, according to Seth Lehman, a Fitch
analyst.

"It would take a long time for a trade issue to filter into the
airport sector," he said.

Ahead of a visit to China this week on city business, Chicago
Mayor Rahm Emanuel raised concerns about the impact of a trade
war on O'Hare International Airport, which he said handles 29
percent of China's air cargo to the United States. Passenger
growth at airports topped 3 percent so far this year, with large
hubs being the leading performers, according to Fitch.